Cryptococcus neoformans is a neurotropic pathogen that causes fatal meningoencephalitis primarily in individuals with T-cell deficiency such as the AIDS patients. The disease is 100% fatal unless treated. C. neoformans is a heterothallic yeast that occurs in two mating types MATalpha and MATa. The yeast cells are encapsulated with a polysaccharide which mainly consists of glucuronoxylomannan. The polysaccharide capsule has been known as the major virulence factor of C. neoformans which allows the yeast to resist host defenses. However, the essential role of the capsule in allowing it to resist host defenses during initial lung infection has not been clearly understood. In 2001-2002,we studied the fate of Cap- cells and Cap+ cells of the same genetic background in mice after intratracheal inoculation. The Cap+ cells persisted in the lung of C.B-17 mice and disseminated to the brain, whereas the Cap- cells grew poorly in the lung and were infrequently detected in the brain. T-cell mediated immunity was required to control growth in the lung and the brain. T-cells were also required for optimal inhibition of growth of Cap- cells in the lung but not for maintaining control of fungal burden in the brain. These observations indicate that capsule plays an important role in lung infection and dissemination to the brain. We identified 2 more capsule associated genes, CPS1 and CAP64B. Deletion of these genes result in a hypocapsular phenotype which is associated with low virulence. We also focused on the molecular dissection of genes associated with the mating system such as the pheromone receptor genes, CPRalpha and CPRa. Deleton of these pheromone receptor genes caused drastic reductions in mating frequency for each strain but did not abolish mating. Deletants of both receptors, however, failed to mate. Synthetic MATalpha and MATa pheromones induced expression of the mating pheromone genes in strains with intact receptors but not in the receptor deletants, indicating that CPR and the mating pheromones are componenets of the same signaling pathway. Unlike pheromone receptors in other fungi, the receptors sense various environmental signals such as low pH, high concentration of CO2 in addition to pheromones of the opposite mating type. The null mutant of CPRa showed a significant reduction in capsule formation in the brain, but not in vitro. This observation suggests that the pheromone receptors of C. neoformans sense the host environmental conditions and regulate the capsule formaton and in turn virulence.